We need to simplify rules for investing in startup firms: Vinod Dham

Regarded as the father of the Intel Pentium chip, Dham is taking on the chief executive’s role at AcadGild, which aims to redefine virtual education.Surabhi Agarwal&Pankaj Mishra | ET Bureau | October 13, 2015, 09:31 IST

Regarded as the father of the Intel Pentium chip, Vinod Dham is taking on the chief executive's role at AcadGild, which aims to redefine virtual education.Regarded as the father of the Intel Pentium chip, Vinod Dham is taking on the chief executive’s role at AcadGild, which aims to redefine virtual education.

In an interview with ET’s Surabhi Agarwal and Pankaj Mishra, Dham spoke about entrepreneurship and the changing world order in technology that’s tilting towards software as well as the Indian startup ecosystem. Edited excerpts:

What is your sense of what is happening in the Valley and elsewhere? Is what is happening in India any different from the earlier curves you saw?

Yes, it is definitely different. The genesis of all this starts with a statement made by Marc Andreessen… in an article in 2012 which was titled ‘Software is eating the world.’ There was much controversy and backlash that followed.

The fact of the matter is that he was right, and it is being proven as we go forward. Entire industries are being transformed, be it Ola or Uber transforming the transport industry or Snapdeal or Flipkart transforming e-commerce or Alibaba doing that in China. He meant that every industry on the planet will become a software industry.

The whole focus is on enterprise software, and clearly valuations are high. And the rise of cloud computing and mobile computing is enabling the transformation of the entire infrastructure. Coming to valuations, it is always an art and not a science. And valuation is also an art that is a function of the marketplace. Currently in the US, there is a lot of demand for such kind of companies. And firms which are getting traction are valued very high.

During the dotcom boom, companies were valued very high without any revenues or profits. But today companies are getting valued really high, but they have real revenues and real profits.

What are your thoughts about the ecosystem in India?

In India, I am just delighted that some of us came here to start venture capital in 2005-06. Till that time, venture capital was still very nascent here. So four or five of us pioneered the idea of creating a serious ecosystem, and establishing a possibility for entrepreneurial type companies, where people can become successful and become millionaires.

In the 21st century, we have to take risks, create this new paradigm, and that requires a different mindset - that’s why I am so excited. In India, VC is not just for the sake of it, but in India it is needed to be the third leg of the stool for the government to look at that to say 10 years or 15 years from now, 15 companies that came out of the thousands that were invested in have become the next multi-billion giants in India. It is going to happen. It is just a matter of time.

Prime Minister Narendra Modi was in the Valley recently. What kind of support does the industry need from the government?

Most of the time, India does very well when they (government) do nothing - one of the best examples of that is software.

This entire software industry took place before they knew what it was all about. Having said that, the government should play a very constructive role in the establishment of new industries.

So this VC, which is an arm that creates entrepreneurism, does need some basic help. Right now, there is a lot of regulation about how the money comes in. It can only come in through Mauritius, which is quite a convoluted process. The process is very complex, if companies have to go for IPO abroad. Alibaba went public in the USA, but if there is an Indian company that has to go public, there is a lot of complexity.

Indian companies are getting incorporated in Singapore, the US…

There should be no reason, if we have to believe in Prime Minister Modi’s vision of Make in India, which is an outstanding vision, then it should all be in India. Why should we have something happening in Mauritius, Singapore? We should do everything here.

Second is that there are still very arcane laws and you can’t shut down companies. But I would say that startups by nature are risky, and a lot of them fail… You can’t use draconian measures to say that. No, these companies will have to be kept alive. This will free up some of the bandwidth of the investors, founders and partners.

What kind of a future do you see for companies like Intel in this new world where software seems to be the guiding force?

Intel’s biggest strength and has always been, even when I was doing Pentium - it wasn’t really highlighted as much - is the underlying silicon technology, not what you design on top of it.

Whether you design a microprocessor, you design a new type of a memory chip, the underlying technology is perhaps the most advanced in the world. There is no one in the world who comes close to Intel in that department.

So the key for Intel is how they leverage this unique differentiated strength that they have… to their advantage in the upcoming world where we are talking about Internet of Things, where everything will be connected to everything, depending on who you believe and what time of the day or year it is.

They talk about 2050, up to 70 billion things that will be connected. And if everything is connected to each other, it requires sensors, it requires chips and can they play a role in that. Which I know they are trying to and they are very aggressively pushing into wearables and other things.

And can they make a standard which gives them the advantage like the X86 did. So, it remains to be seen, but they are trying. Intel luckily is in a very good spot right now. Data centres, which are required for cloud computing, are taking off in a big way and growing at 20-30% per year and Intel is at the heart of it. It has 80-90% market share in that particular arena.

What is the future of hardware?

Look at all the new kind of technology coming out in drones, artificial Intelligence, robotics and all that. So hardware will continue to move forward but there is one difference — hardware, thanks to Moore’s law, has become a commodity.

We talk more about software and not hardware because software is the one that is making things happen. Its significance has been somewhat overwhelmed by the software. I am proud to have led and been a part of the hardware wave, but now I’m at a point where I also look back and say that the charm of hardware is gone, it’s all going to be software.